Correlation Between Microbot Medical and Pure Storage

Can any of the company-specific risk be diversified away by investing in both Microbot Medical and Pure Storage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microbot Medical and Pure Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microbot Medical and Pure Storage, you can compare the effects of market volatilities on Microbot Medical and Pure Storage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microbot Medical with a short position of Pure Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and Pure Storage.

Diversification Opportunities for Microbot Medical and Pure Storage

0.68

Correlation Coefficient

Microbot Medical  Pure Storage

Poor diversification

The 3 months correlation between Microbot and Pure is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage and Microbot Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microbot Medical are associated (or correlated) with Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of Microbot Medical i.e., Microbot Medical and Pure Storage go up and down completely randomly.

Pair Corralation between Microbot Medical and Pure Storage

Assuming the 90 days trading horizon Microbot Medical is expected to generate 1.81 times less return on investment than Pure Storage. In addition to that, Microbot Medical is 3.25 times more volatile than Pure Storage. It trades about 0.01 of its total potential returns per unit of risk. Pure Storage is currently generating about 0.07 per unit of volatility. If you would invest  2,405  in Pure Storage on October 5, 2024 and sell it today you would earn a total of  3,650  from holding Pure Storage or generate 151.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Microbot Medical  vs.  Pure Storage

Microbot Medical

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Microbot Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pure Storage

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Pure Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microbot Medical and Pure Storage

The main advantage of trading using opposite Microbot Medical and Pure Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical position performs unexpectedly, Pure Storage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pure Storage will offset losses from the drop in Pure Storage's long position.

The idea behind Microbot Medical and Pure Storage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.